Can A Computer Deny My Medicaid Application?

In the information age, computer programs are increasingly relied upon to streamline and facilitate important decisions. A number of states require online applications for Medicaid. In New Jersey and other states, Medicaid caseworkers have access to Social Security databases and even monthly bank balances, which are otherwise protected under bank secrecy laws. Bank accounts in addition to those listed by the applicant on the Medicaid application can be identified with computer matching data. The computerized process is unquestionably far more efficient than the old-school method, which involved a lot of early mornings and late nights, during which the attorney responsible for filing the Medicaid application would manually review every transaction listed on every page of up to five years of bank statements and then compare available withdrawal and deposit slips with all of the contemporaneous deposits and withdrawals for multiple accounts, in effort to “verify” that there were no other unknown accounts throwing off income. In these situations, a computer program which can scan the bank statements and identify unverified deposits is a godsend. However, two recent Medicaid cases from opposite regions of the United States recently prompted me to ponder whether there should be limits on the use of computer programs in determining or terminating Medicaid eligibility.

Earlier this month, a federal district court Medicaid case focused on the use, by the Arizona Medicaid agency, of the Health-e-Arizona Plus computer program, in processing welfare benefit applications. Darjee v. Betlach, No. CV-16-00489-TUC-RM (DTF) (Dist. Ariz., September 5, 2018) was brought on behalf of multiple Medicaid enrollees, who argued that the computer programs placed them at risk of undue delays in the proper processing of their applications, in violation of the federal Medicaid Act.

Apparently, once their important information was entered into the Health-e Arizona Plus program, the information was accessible only within the Medicaid application it was entered on, and the software program did not import the missing information into a subsequent Medicaid application for the same individual. The result was that information entered on earlier Medicaid applications was not considered on subsequent ones, resulting in inadvertent decreases in benefit entitlements. A federal lawsuit was filed on behalf of those Medicaid enrollees, whose welfare benefits were improperly reduced by Health-e-Arizona program. Their benefits, however, were later restored. Plaintiffs alleged ongoing and systemic improper Medicaid benefit reductions in violation of the due process clause of the Fourteenth Amendment and the federal Medicaid Act, based on the use of the computer program.

As the Darjee case shows, even computer programs have their limits. Computers do not have empathy, do not care about fairness, will not always identify additional information needed to determine Medicaid eligibility, and will certainly not go the extra mile to obtain the necessary documents for the applicant.

Especially in New Jersey, where Medicaid eligibility denials for “failure to verify” are common, this can be problematic. In A.F. v. D.M.A.H.S, No. A-2163-16T1 (N.J. Super., App.Div., July 23, 2018), the Morris County Board of Social Services terminated the Medicaid benefits previously authorized to a quadriplegic of many years, who was completely dependent on the personal care financed by the terminated Medicaid benefit. In an Orwellian twist (which you knew was coming), the reason cited for the termination was the alleged failure to verify two life insurance policies, neither of which was owned by A.F. and as to which no further details were revealed.

Because A.F. held no incidents of ownership in the policies, A.F. could have not verified the policies on a timely filed Medicaid eligibility redetermination. Although the policy was ultimately revealed on Fair Hearing to be a term life insurance policy with no cash surrender value, the agency refused to waive a few weeks’ delay to re-instate benefits for A.F., who was a severely disabled individual. The administrative law judge re-instated A.F.’s Medicaid eligibility on Fair Hearing, but the state Medicaid agency director reversed this decision, forcing A.F.’s attorney to challenge the decision of the agency director in the Appellate Division. Fortunately, A.F. prevailed in the Appellate Division, but justice delayed can be justice denied.

My take-away from these decisions is that while artificial intelligence can be helpful, it remains critical to enlist the assistance of a seasoned Medicaid attorney to timely identify, gather and organize all of the financial documents needed to establish Medicaid eligibility. While a computer program can definitely expedite a complex eligibility determination process easier, there is no substitute for the human touch in the Medicaid application process.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability Law, Taxation, and Trusts and Estates Groups. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.